Home > News Center > article

Uber and  Segro Seeks New Avenue of Growth in Leasing Market

2018-11-12 11:09 Monday


Over the past few months, Uber has incurred substantial losses. To reverse this trend, the company has sought out new business, including food delivery services and leasing.

Uber

Uber's latest foray is its entry into the trailer leasing business. The new business is called Powerloop, and will become a subsidiary department of Uber Freight. The business will connect truckers with shippers to provide convenient logistics services.

Powerloop intends to rent trailers to carriers, and will begin with a trial in Texas, before expanding to other U.S. regions.

Thanks to the growing demand for warehouse space from online retailers, the UK's largest listed commercial property giant. Segro increased its leasing business volume by 43%.

The warehouse investor's total contracted rent over the first nine months of 2018 reached 52 million pounds, up from 36.4 million pounds the previous year. The company completed 219,800 square metres of new development duringlast quarter, generating 10.6 million pounds rent, down from 313,000 square metres and 12 million pounds in 2017.

In 2018 to date, Segro has invested 454 million pounds with a further 500 million pounds of investment expected over the rest of the year. For 2017, the company's net investment exceeded 592 million pounds.

The rise of Amazon and other online retailers, which use a large amount of warehouse space for distribution, has made investors enthusiastic about warehouse property. According to the CBRE monthly index, industrial property values rose 2.3% in the third quarter of 2018, bringing the total rise for the first nine months of the year to 9.4%.

David Sleath, Segro chief executive, explained his company's ambitions: "The structural trends of e-commerce and urbanization continue to increase occupier and investor demand for prime warehouse space, notwithstanding near-term economic and political uncertainty in the UK. We remain optimistic about our prospects for the remainder of the year and into 2019."

However, Segro's vacancy rate increased to 5.2% from 4.8% at the end of the previous quarter, mainly due to completion of speculative developments.

Robert Duncan, an analyst at Numis, noted:  "Sentiment had cooled somewhat in recent months. Segro's shares have lost 9.7% in the past three months, compared with 8.7% for the sector as a whole. I'm sure Segro's business model would be defensive in a messy Brexit environment".

Related Reading